- Reda Cherif, Fuad Hasanov, and Min Zhu
- Published Date:
- April 2016
On the Need for Economic Diversification
Economic diversification is a crucial subject for Kuwait and the other countries in the Gulf Cooperation Council. We need to step up efforts to diversify economic activities in order to reduce dependence on oil as the main source of output, exports, and public revenues, and to provide the high and growing number of newcomers into the labor market with productive jobs.
Kuwait’s growth model has delivered substantial improvements in living standards over the past several decades. It has also ensured a sufficient level of infrastructure and high-quality public services. However, this growth model has incurred large costs. The public sector wage bill as a percentage of public spending is very high, and subsidizing basic goods is a heavy burden on our state budget. Non-oil public revenues were never an important part of total government revenue. The participation of national labor in the private sector is very low, and, above all, limited progress has been made on economic diversification.
Kuwait has initiated a number of steps to expand and enhance the business environment and to encourage the private sector to lead development and create jobs. As a matter of fact, one of the main goals of the economic development plan is for the private sector to lead the development of the economy. Public-private partnerships through the Partnership Technical Bureau and entrepreneurship through the National SME Fund are possible channels to spearhead development and diversification.
Yet, this is only the beginning of the process to diversify our economy. There is still a long way to go. While some of the reforms needed to promote private sector growth are complex and will take some time to pay off, we need to be persistent in our efforts, and make sure that the door is open to national and foreign private sector initiatives. We can learn from the experiences of other countries and apply the lessons to take the diversification agenda forward.
His Excellency Anas Al-Saleh
Minister of Finance
BREAKING THE OIL SPELL
THE GULF FALCONS’ PATH TO DIVERSIFICATION
Reda Cherif Fuad Hasanov Min Zhu
© 2016 International Monetary Fund
Cover design: IMF Multimedia Services Division
Cover image courtesy of Kuwait Petroleum Corporation.
Calligraphy by Mehveş Konuk. Used with permission.
Joint Bank-Fund Library
Names: Cherif, Reda. | Hasanov, Fuad, 1978– | Zhu, Min, 1951– | International Monetary Fund.
Title: Breaking the oil spell: the Gulf Falcons’ path to diversification / editors: Reda Cherif, Fuad Hasanov, Min Zhu.
Other titles: Gulf Falcons’ path to diversification
Description: Washington, DC: International Monetary Fund, 2016. | Includes bibliographical references and index.
Identifiers: ISBN 978-1-51353-786-3 (paper)
Subjects: LCSH: Petroleum industry and trade—Persian Gulf Region. | Economic development—Persian Gulf Region. | Natural resources—Persian Gulf Region. | Diversification in industry—Persian Gulf Region.
Classification: LCC HD9576.P352 B73 2016
The views expressed in this book are those of the authors and do not necessarily represent the views of the International Monetary Fund, its Executive Board, or IMF management.
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